OIL FUTURES: Crude Above $82 On Weak Dollar, Gasoline Demand

FlorenceTan

SINGAPORE (MarketWatch) -- Crude oil futures rose Wednesday and held above $82 a barrel for much of the Asian trading day as a weaker dollar and a larger-than-expected draw on U.S. gasoline stocks buoyed prices ahead of more inventory data and a major producers' meeting.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in April traded at $82.16 a barrel at 0217 GMT, up 46 cents in the Globex electronic session. May Brent crude on London's ICE Futures exchange rose 43 cents to $80.96 a barrel.

Crude prices rose by more than 2% Tuesday after the U.S. Federal Reserve's decision to keep interest rates low increased investors' appetite for riskier assets such as commodities.

"The main driver is still the dollar at the moment," said Mark Pervan, head of commodities research at ANZ Global Markets, adding that the U.S. central bank's policy announcement will likely keep the dollar's value lower for longer. A weaker dollar makes oil more attractive for holders of other currencies.

Traders are focusing Wednesday on the Organization of Petroleum Exporting Countries meeting in Vienna and fresh weekly U.S. inventory data from the Energy Information Administration for signs of a demand recovery.

OPEC will likely maintain its formal oil-production target when it meets later Wednesday, but talks about compliance, which is still pretty lax among members, will create a bit more upside for prices, Pervan said.

The American Petroleum Institute, an industry group, late Tuesday reported a 403,000-barrel increase in crude stocks, lower than expectations of a 1 million-barrel increase. Gasoline inventories fell six times more than expected, at 3.65 million barrels, implying strong demand at the world's largest oil consumer.

Distillate stocks, which include diesel and heating oil, were down 756,000 barrels--lower than the 1 million-barrel decline forecast--and refinery processing rates rose 0.4 percentage point to 81.3% of capacity.

However, a surprising large drop in U.S. crude imports may damp sentiment, Pervan said.

Crude oil imports fell by 1.2 million barrels a day or a total of 8.4 million barrels in the week to March 12, API's data showed.

A normal import level would have added to crude oil stocks, Pervan noted.

The EIA will release its oil inventory data at 10:30 a.m. EDT Wednesday.

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